Aug 2026· Emerging Science Journal· 0 citations· 34 references
Abstract
This study investigates the determinants of credit growth in Western Balkan countries over the period 2011–2023, assessing whether lending dynamics are driven by macroeconomic fundamentals or financial sector conditions. The analysis focuses on key variables, including GDP growth, foreign direct investment (FDI), inflation, and lending interest rates. Using a balanced panel dataset, the study employs pooled Ordinary Least Squares (OLS), fixed and random effects models, and a two-way fixed effects specification with Driscoll–Kraay standard errors to address cross-sectional dependence and unobserved heterogeneity. The empirical results show that lending interest rates exert a statistically significant negative effect on credit growth, indicating that financial conditions play a central role in constraining lending activity. In contrast, GDP growth and inflation are not found to be significant determinants, challenging conventional macro-financial expectations. FDI becomes significant only when introduced in a lagged specification, suggesting a delayed transmission mechanism through which external capital inflows influence credit expansion. The study contributes to the literature by providing comparative multi-country evidence from structurally constrained and bank-dominated financial systems. The findings suggest that credit growth is driven less by traditional macroeconomic factors and more by financial sector conditions and institutional characteristics. These results have important policy implications, highlighting the need to strengthen financial intermediation efficiency and credit transmission mechanisms rather than relying solely on macroeconomic expansion to stimulate lending.
This study analyses the influence of financial inclusion and macroeconomic variables on Foreign Direct Investment (FDI) in nine Asian countries with the highest FDI performance during 2011–2023. Using secondary data from the World Bank, this research employs a dynamic panel-data approach with the First-Difference Generalised Method of Moments (FD-GMM) to address potential endogeneity issues. The variables examined include inflation, interest rates, trade openness, bank credit financing, and the number of bank branches as proxies for financial inclusion. The results indicate that all variables have a positive and significant effect on FDI inflows. The main contributions of this study lie in three areas. First, this study integrates financial inclusion indicators—specifically bank credit and branch availability—into the analysis of FDI determinants, an area that remains underexplored compared to traditional macroeconomic factors. Second, this study provides empirical evidence from a focused sample of top-performing Asian economies, offering more targeted regional insights into FDI dynamics. Third, by applying the FD-GMM approach, this study enhances methodological robustness by addressing endogeneity and dynamic relationships, which are often overlooked in conventional panel-data analyses. These findings suggest that strengthening financial inclusion alongside maintaining macroeconomic stability can significantly enhance a country's attractiveness to foreign investors. From a policy perspective, governments should improve access to financial services while maintaining macroeconomic stability to foster a more conducive investment climate. These findings also provide empirical evidence for policymakers in emerging Asian economies seeking to design strategies for attracting sustainable foreign direct investment.
Hopkins Henry Kawaye, Agustina Puji Rahayu, F. Lubis et al.· JAMPE (Journal of Asset Mana...· 0 citations
This study empirically investigates the effects of selected macroeconomic determinants on foreign direct investment (FDI) inflows in Kenya. Using annual time-series data covering 1986–2021, the study applies an autoregressive distributed lag (ARDL) model to capture short-run dynamics and lagged adjustment effects in FDI. Secondary data were obtained from official national sources: exchange-rate and interest-rate series were drawn from the Central Bank of Kenya, while inflation and FDI series were obtained from the Kenya National Bureau of Statistics. The ARDL bounds test suggests no cointegration at the 5% level; therefore, the results should be interpreted mainly as short-run relationships. Structural-break testing indicates a regime shift around 2013. The regression results show that the contemporaneous exchange-rate measure has a positive and statistically significant association with FDI. Inflation is positive and significant in the current period and at selected lags, while interest rates are positive and significant in the current period and show a delayed effect. The findings underscore the importance of macroeconomic conditions in shaping Kenya’s FDI dynamics and suggest that policies promoting exchange-rate predictability, inflation stability, and interest-rate credibility may strengthen investor confidence.
Stella Kagendo Ndwiga Ndung’u· Asian Journal of Economics B...· 0 citations
This study investigates the dynamic relationships among financial development, globalization, foreign direct investment (FDI), investment rates, and economic performance in 27 non-OECD developed economies over the period 1995–2024. Anchored on the endogenous growth framework, the study employs panel econometric techniques including pooled ordinary least squares (POLS), fixed effects (FE), Pesaran Cross-sectional Dependence (CD) tests, and the Dynamic Common Correlated Effects (DCCE) estimator to account for heterogeneity and cross-sectional dependence. Descriptive statistics indicate relatively high levels of globalization and financial development across the sampled economies, while the Pesaran CD results confirm significant cross-sectional dependence among all variables at the 1% significance level. The POLS results reveal that investment rate, financial development, and globalization positively and significantly influence GDP per capita, whereas FDI exhibits a negative short-run effect. Under the fixed effects model, human capital and investment rate maintain significant positive effects on growth. However, the DCCE estimation shows that investment rate remains positively significant, while financial development exerts a weak negative effect after accounting for dynamic heterogeneity and common global shocks. The lagged GDP per capita coefficient (1.0115) further confirms strong growth persistence across countries. Sensitivity analysis demonstrates that the estimated relationships remain stable after excluding crisis periods, indicating robustness of the findings. The study concludes that financial deepening, productive investment, and globalization remain important determinants of economic performance, although their effects depend significantly on institutional quality, macroeconomic stability, and the capacity of economies to absorb external shocks. The study recommends stronger financial sector regulation, investment-friendly policies, institutional strengthening, and coordinated macroeconomic frameworks to sustain long-run growth in non-OECD developed economies.
T. Muritala· The Annals of the University...· 0 citations
Research Originality: This research is original in its examination of the impact of macroeconomic determinants on economic growth in Developing-8 countries, which accounts for cross-sectional dependence and country heterogeneity.
Research Objectives: The study aims to analyze the short-run and long-run effects of external debt, exchange rates, foreign direct investment, inflation, and balance of trade on economic growth in selected Developing-8 countries over the period 1997–2024.
Research Methods: The study employs a Cross-Sectionally Augmented ARDL model combined with the Error Correction Model by using secondary panel data from six members of the Developing-8 countries to capture dynamic relationships and long-run equilibrium, supported by unit root, cross-sectional dependence, and robustness tests.
Empirical Results: The findings indicate that external debt and exchange rates have positive short-run effects on growth, while inflation and the trade balance have negative immediate effects. Foreign domestic investment shows no significant short-run effect but becomes positive in the long run, and the error correction term confirms a stable long-run relationship.
Implications: The results suggest that policymakers should ensure sustainable external debt management, maintain exchange rate stability, enhance the effectiveness of foreign domestic investment, and control inflation to support long-term economic growth in Developing-8 countries.
JEL Classification: E31, F31, F34, O47
How to Cite:Nehe, R. L., & Suhartoko, Y. B. (2024). Macroeconomic Determinants of Economic Growth in Developing-8 Countries: Panel Cross-Sectionally Augmented ARDL. Signifikan: Jurnal Ilmu Ekonomi, 15(2), 339-354. https://doi.org/10.15408/sjie.v15i2.50607.
Robert Larson Nehe, Y. B. Suhartoko· Signifikan· 0 citations
The study examines the relationship between financial dollarization and macroeconomic development in the Commonwealth of Independent States (CIS). Most previous studies have examined the drivers of dollarization, inflation trends, exchange-rate arrangements, and financial stability outcomes. Far less attention has been given to how dollarization relates directly to economic growth.
The present analysis contributes to this area by investigating whether lower levels of financial dollarization coincide with higher GDP growth in CIS countries. The study employs a longitudinal panel dataset covering ten CIS countries during 2010 -2023. Data were collected from the World Bank, International Monetary Fund, Transparency International, and national central banks. Annual GDP growth was used as the indicator of macroeconomic development, while financial dollarization was measured through the share of foreign-currency deposits and loans in the banking system. The empirical analysis applied pooled ordinary least squares, random-effects, and fixed-effects panel regression models, supplemented by diagnostic and robustness tests.
The results indicate a statistically significant negative relationship between financial dollarization and economic growth. Higher levels of foreign-currency dependence were associated with lower GDP growth rates across all model specifications. Results from the preferred fixed-effects specification indicate that a one-percentage-point rise in financial dollarization is associated with lower GDP growth after accounting for inflation, trade openness, institutional quality, and exchange-rate volatility. The findings also suggest that stronger government effectiveness and greater trade openness support economic performance, while higher inflation and increased exchange-rate volatility are linked to weaker growth outcomes.
The findings indicate that lower reliance on foreign-currency deposits and loans is associated with stronger macroeconomic performance within the estimated panel framework. However, the observational design does not permit strong causal inference regarding the direction of this relationship. The results provide evidence relevant to monetary authorities seeking to reduce financial dollarization and enhance confidence in domestic currencies across the CIS region.
A. Sembekov, A. Ayulov, Rakymzhan K. Yelshibayev et al.· Frontiers in Political Scien...· 0 citations
Investment credit plays an important role in financing productive activities and sustaining Indonesia's economic development. Nevertheless, limited empirical evidence is available regarding how fluctuations in gold prices together with other macroeconomic indicators influence investment credit during the post-pandemic period. This study investigates the effects of gold prices, the USD/IDR exchange rate, the Industrial Production Index (IPI), the BI 7-Day Reverse Repo Rate, and inflation on investment credit using monthly observations from June 2016 to December 2024. An Autoregressive Distributed Lag (ARDL) model combined with an Error Correction Model (ECM) is employed to evaluate both long-run associations and short-run adjustments. The empirical findings reveal that the variables are cointegrated, implying the existence of a stable long-term equilibrium. However, none of the estimated long-run coefficients is statistically distinguishable from zero at conventional significance levels. In the short run, exchange rate movements generate the largest response in investment credit, whereas industrial production and the policy interest rate produce relatively modest effects. The error-correction coefficient is negative and statistically significant, indicating that temporary departures from equilibrium are gradually eliminated over time. These findings suggest that investment credit in Indonesia is driven primarily by short-term macroeconomic adjustments rather than persistent long-run effects of individual macroeconomic variables.
N. Atikah, Nadia Kholifia, Lucky Tri Oktoviana et al.· CAUCHY· 0 citations